Correlation Between FB Financial and International Bancshares
Can any of the company-specific risk be diversified away by investing in both FB Financial and International Bancshares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FB Financial and International Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FB Financial Corp and International Bancshares, you can compare the effects of market volatilities on FB Financial and International Bancshares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FB Financial with a short position of International Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of FB Financial and International Bancshares.
Diversification Opportunities for FB Financial and International Bancshares
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FBK and International is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and International Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Bancshares and FB Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FB Financial Corp are associated (or correlated) with International Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bancshares has no effect on the direction of FB Financial i.e., FB Financial and International Bancshares go up and down completely randomly.
Pair Corralation between FB Financial and International Bancshares
Considering the 90-day investment horizon FB Financial is expected to generate 1.23 times less return on investment than International Bancshares. In addition to that, FB Financial is 1.03 times more volatile than International Bancshares. It trades about 0.19 of its total potential returns per unit of risk. International Bancshares is currently generating about 0.25 per unit of volatility. If you would invest 6,126 in International Bancshares on September 1, 2024 and sell it today you would earn a total of 1,187 from holding International Bancshares or generate 19.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FB Financial Corp vs. International Bancshares
Performance |
| Timeline |
| FB Financial Corp |
| International Bancshares |
FB Financial and International Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FB Financial and International Bancshares
The main advantage of trading using opposite FB Financial and International Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FB Financial position performs unexpectedly, International Bancshares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in International Bancshares will offset losses from the drop in International Bancshares' long position.| FB Financial vs. Affinity Bancshares | FB Financial vs. Southern California Bancorp | FB Financial vs. Auburn National Bancorporation | FB Financial vs. BayCom Corp |
| International Bancshares vs. Home Federal Bancorp | International Bancshares vs. First Financial Northwest | International Bancshares vs. First Northwest Bancorp | International Bancshares vs. First Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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